Global New Material International (HKG:6616) said it has formed an investment partnership and entered into a conditional agreement to acquire a 29.9% stake in Zhejiang Jihua (SHA:603980) for 1.49 billion, according to a Wednesday Hong Kong bourse filing.

Shares of Global New Material fell more than 4% in late-morning trade on Thursday, while Zhejiang Jihua fell over 2% in Shanghai.

The stake will be acquired through Junheng, a newly established investment partnership, the filing said.

The company's wholly owned subsidiary, Shenzhen Chesir, holds a 40% interest in the vehicle, while Hongzun LLP, an associate of chairman and chief executive Su Ertian, owns the remaining 60%.

Junheng has committed a total capital of 700 million yuan, with the remaining purchase consideration expected to be funded through external financing, including potential bank borrowings, the filing said.

Upon completion, Zhejiang Jihua would be treated as a non-wholly owned subsidiary and its financial results consolidated into the group's accounts.